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distributable net income

Every year I like to post a quick Estate and Gift Tax update for you to reference throughout the year. This way, if you’re anything like me, you won’t find yourself constantly “Googling” different estate and gift tax thresholds at the beginning of the year for a quick refresher on the updated thresholds. The purpose of this post is to provide a snapshot of some of the most common 2017 estate and gift tax thresholds, tax rates, exemptions, elections, etc. Feel free to use this how you see fit. Additionally, if you have any other commonly used 2017 estate and/or gift tax updates that I may have left off the list, please feel free to leave them in the comments.

Federal Gift Tax

Lifetime Exemption: $5,490,000

Annual Exclusion: $14,000

Gift-Splitting: Yes, if married and spouse consents (i.e., annual exclusion is $28,000 for married couples)

Portability: Yes (i.e., surviving spouse may elect to use deceased spouse’s unused exemption, in effect, giving married couples an exemption of $10,980,000)

Rate: 40% on the value of the estate above the exemption amount

Federal Income Tax for Trusts and Estates

Tax Brackets: see chart below

Tax Rates: see chart below

Net Investment Income Tax: A 3.8% surcharge tax on net investment income applies to trusts and estates that are above the $12,500 income threshold (i.e., the marginal tax rate on net investment income above that threshold is then 43.4%)

Distributable Net Income: Net income that is distributed to beneficiaries of a trust or estate is taxed at the beneficiaries’ level and not at the trust or estate’s level

Chart: Federal Income Taxation of Trusts and Estates

If Taxable Income is:

The Tax is:

Not over $2,550

15% of the taxable income

Over $2,550 but not over $6,000

$382.50 plus 25% of the excess over $2,550

Over $6,000 but not over $9,150

$1,245.00 plus 28% of the excess over $6,000

Over $9,150 but not over $12,500

$2,127.00 plus 33% of the excess over $9,150

Over $12,500

$3,232.50 plus 39.6% of the excess over $12,500

State Taxes

Each State has its own set of rules when it comes to estate tax, gift tax, inheritance tax, and income taxation of trusts and estates. Be sure to check with a professional in your State for an update.

Last year it dawned on me that a lot of us out there, including myself, find ourselves constantly “Googleing” different estate and gift tax thresholds throughout the beginning of the year for a quick refresher on the updated thresholds. The purpose of this post is to provide a snapshot of some of the most common 2016 estate and gift tax thresholds, tax rates, exemptions, elections, etc. Feel free to use this how you see fit. Additionally, if you have any other commonly used 2016 estate and/or gift tax updates that I may have left off the list, please feel free to leave them in the comments.

Federal Gift Tax

Lifetime Exemption: $5,450,000

Annual Exclusion: $14,000

Gift-Splitting: Yes, if married and spouse consents (i.e., annual exclusion is $28,000 for married couples)

Portability: Yes (i.e., surviving spouse may elect to use deceased spouse’s unused exemption, in effect, giving married couples an exemption of $10,900,000)

Rate: 40% on the value of the estate above the exemption amount

Federal Income Tax for Trusts and Estates

Tax Brackets: see chart below

Tax Rates: see chart below

Net Investment Income Tax: A 3.8% surcharge tax on net investment income applies to trusts and estates that are above the $12,300 income threshold (i.e., the marginal tax rate on net investment income above that threshold is then 43.4%)

Distributable Net Income: Net income that is distributed to beneficiaries of a trust or estate is taxed at the beneficiaries’ level and not at the trust or estate’s level

Chart: Federal Income Taxation of Trusts and Estates

If Taxable Income is:

The Tax is:

Not over $2,550

15% of the taxable income

Over $2,550 but not over $5,950

$382.50 plus 25% of the excess over $2,550

Over $5,950 but not over $9,050

$1,232.50 plus 28% of the excess over $5,950

Over $9,050 but not over $12,400

$2,100.50 plus 33% of the excess over $9,050

Over $12,400

$3,206 plus 39.6% of the excess over $12,400

State Taxes

Each State has its own set of rules when it comes to estate tax, gift tax, inheritance tax, and income taxation of trusts and estates. Be sure to check with a professional in your State for an update.

It recently dawned on me that a lot of us out there, including myself, find ourselves constantly “Googleing” different estate and gift tax thresholds throughout the beginning of the year for a quick refresher on the updated thresholds. The purpose of this post is to provide a snapshot of some of the most common 2015 estate and gift tax thresholds, tax rates, exemptions, elections, etc. Feel free to use this how you see fit. Additionally, if you have any other commonly used 2015 estate and/or gift tax updates that I may have left off the list, feel free to leave them in the comments.

Federal Gift Tax

Lifetime Exemption: $5,430,000

Annual Exclusion: $14,000

Gift-Splitting: Yes, if married and spouse consents (i.e., annual exclusion is $28,000 for married couples)

Portability: Yes (i.e., surviving spouse may elect to use deceased spouse’s unused exemption, in effect, giving married couples an exemption of $10,860,000)

Rate: 40% on the value of the estate above the exemption amount

Federal Income Tax for Trusts and Estates

Tax Brackets: see chart below

Tax Rates: see chart below

Net Investment Income Tax: A 3.8% surcharge tax on net investment income applies to trusts and estates that are above the $12,300 income threshold (i.e., the marginal tax rate on net investment income above that threshold is then 43.4%)

Distributable Net Income: Net income that is distributed to beneficiaries of a trust or estate is taxed at the beneficiaries’ level and not at the trust or estate’s level

Chart: Federal Income Taxation of Trusts and Estates

If Taxable Income is:

The Tax is:

Not over $2,500

15% of the taxable income

Over $2,500 but not over $5,900

$375 plus 25% of the excess over $2,500

Over $5,900 but not over $9,050

$1,225 plus 28% of the excess over $5,900

Over $9,050 but not over $12,300

$2,107 plus 33% of the excess over $9,050

Over $12,300

$3,179.50 plus 39.6% of the excess over $12,300

State Taxes

Each State has its own set of rules when it comes to estate tax, gift tax, inheritance tax, and income taxation of trusts and estates. Be sure to check with a professional in your State for an update.

Disclaimer

This blog constitutes my personal viewpoint, it is not legal advice or representative of any position taken by the firm I work for or other associations I belong to. Your use of the information in this blog does not create an attorney-client relationship. The opinions in this blog are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which estate planning techniques/strategies may be appropriate for you, consult an experienced attorney. If any material in this blog contains advice concerning any tax issue or submission, please be advised that it was not intended or written to be used, and that it cannot be used, for the purpose of avoiding tax penalties unless otherwise expressly indicated.